Population Growth and Economic Development Policy Questions (1986) / Chapter Skim
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1 Will slower population growth increase the growth rate of per capita income through increasing per capita availability of exhaustible resources?
1 Will slower population growth increase the growth rate of per capita income through increasing per capita availability of exhaustible resources?
Pages 11-17
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From page 11... ...
Perhaps because of Me evident scarcity of the earth's resources, institutions governing property rights to Me most important exhaustible resources have a long history. Market mechanisms are the most important institutions for allocating resources among users, and even in societies win nonmarlcet economic systems, world market conditions exert an important influence on resource allocation decisions.
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From page 12... ...
In a setting with perfect competition and perfect capital markets, whose participants accurately anticipate future supply and demand conditions, prices will efficiently allocate resources among altemadve uses and over time, in the sense that no individual in any generation could be made better off without someone else being made worse off. In formulations that demonstrate this result, fixture prices are discounted at the market rate of interest, which incorporates the premium that must be paid to agents to defer current
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From page 13... ...
Of course, the conditions ensuring intertemporally efficient resource allocations are unlikely to be satisfied precisely. Particularly unrealistic is the condition of perfect fores~ght-that current market participants correctly anticipate the future course of supply and demand so that the spot price of a resource at any time is linked to all future pnces.
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From page 14... ...
To summarize, because virtually all economically important exhaustible resources are allocated by markets or by nonmarket social institutions that approximate market processes, the increasing physical scarcity of a resource wilt be reflected in increases in its price. In turn, price increases tend to stimulate conservation, improvements in extraction technology, and the search for less expensive substitutes.
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From page 15... ...
POPULATION AND EXHAUSTIBLE RESOURCES Although He central focus of this report is the impact of population growth at the country level, He scope of this discussion of exhaustible resources is at a global level because of Be nature of resources. The extensive international We in fossil energy and nonfuel mineral resources means that any effects of increased demand due to population growth in developing counties will be experienced in world markets, affecting all nations.
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From page 16... ...
As any particular resource becomes physically scarce, its concomitant price rise stimulates conservation, improvements in extraction technology, and the search for less expensive substitutes. These adaptations serve to greatly mute, and perhaps entirely counteract, any negative effect of resource depletion on the standard of living.
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From page 17... ...
But since it is neither simple nor costless to remove distortions or to create markets where none exist, the prescription of letting markets function efficiently without worrying about resource exhaustion must be qualified. Ihus it is not clear that the effective price of resources will rise over time or that slower population grown will delay the date at which an ascending price level reaches any given point.
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